The impact of carbon taxation on the triple bottom line of the South African motor vehicle manufacturing industry

The impact of carbon taxation on the

triple bottom line of the South African

motor vehicle manufacturing industry

S.S. Pillay

21475385

M.Com (Taxation), CA (SA)

Thesis

submitted in

fulfillment of the requirements for the

degree Philosophiae Doctor in Taxation at the Potchefstroom

Campus of the North-West University

Promoter:

Prof P.W. Buys

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Title: The impact of carbon taxation on the triple bottom line of the motor vehicle

manufacturing industry

Key terms: Accounting, cap-and-trade, carbon dioxide, carbon taxation, climate change,

corporate responsibility, corporate social investment, greenhouse gas, social cost of carbon, sustainable development, sustainable reporting, triple bottom line.

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Climate change has become an important concern for most governments in the current day. The impact of global warming on economic productivity, human welfare and environmental sustainability is becoming increasingly apparent to most people on the planet, resulting in a rapid evolution of policy instruments which are capable of addressing the issue of climate change. The ultimate aim of these policy instruments is to influence corporate activity to environmentally sustainable behaviour. The two most common policy instruments to effect change to most environmentally sustainable behaviour is carbon taxation and cap-and-trade schemes.

Linked to climate change and environmental sustainability is the concept of sustainable development which encompasses environmental sustainability, economic sustainability and social sustainability. These principles are formalized and made relevant for companies in the form of the triple bottom line. In South Africa, National Treasury implemented a carbon excise tax in 2010 for the motor vehicle manufacturing industry in response to the problem of global warming, and published a discussion document in support of their decision to implement carbon tax. The document highlighted reasons for the choice of carbon tax over other policy instruments such as cap-and-trade schemes and penalties. Even though the choice for carbon tax was assessed from an environmental perspective, the concept of sustainable development encompasses environmental, economic and social sustainability. The subject matter for the 1st article was to compare the two most widely used climate change instruments, known as cap-and-trade schemes and carbon tax, from the broader perspective of sustainable development. This included

an analysis of the effects of both instruments on both greenhouse gases as well as economic indicators such as gross domestic product (GDP) and fiscal revenue.

Linked to the implementation of any instrument designed to address carbon emissions is the concept of the social cost of carbon (SCC). The SCC is an estimate of the associated monetary cost of the damage cause by emitting one additional ton of carbon into the atmosphere. In a perfect world the SCC would be equal to, or lower than, the carbon tax price. National Treasury‟s carbon tax price has never been assessed from an economic perspective and in particular whether the price equates to the SCC from a feasibility viewpoint. The testing of the carbon tax price against the SCC from an economic perspective was the subject of the 2nd article, which then also evaluated the impact of carbon tax on motor vehicle manufacturer‟s production techniques and vehicle fuel efficiency.

Under the assumption that the carbon tax price approximates the SCC it is arguable that companies are effectively paying for the damage cost to the environment in the form of the carbon excise tax implemented. If the argument holds true, then the corporate social investment expenditure may well be adjusted since corporate responsibilities to the environment have been partially addressed by the payment of carbon tax. The impact of carbon tax on CSI expenditure by motor vehicle manufacturers in South Africa was the subject of the 3rd article in the thesis.

Furthermore, also linked to the implementation of carbon taxation for the motor vehicle industry is the financial and sustainability reporting of the motor vehicle manufacturers‟ tax in the sustainability report and financial statements. Since carbon tax was designed to promote behaviour toward a lower carbon footprint, evidence that such behaviour is being affected can be observed in a company‟s sustainability report, which specifies the company‟s planned path to carbon reduction in accordance with the disclosure standards set in the Global Reporting Initiative (GRI). In terms of financial accounting there is no specific International Financial Reporting Standard (IFRS) statement dealing with carbon tax, and the correct treatment thereof will have to be interpreted in accordance with existing accounting standards on revenue (IAS 18) and provisions (IAS 37). The subject matter of 4th article assessed motor vehicle manufacturers reporting compliance of carbon tax transactions in accordance with IFRS and the GRI.

In summary, the implementation of carbon tax in South Africa is seen as a significant move in the fight against climate change. If the instrument is to be considered effective it must prove to be sustainable from an environmental, economic and social perspective. The effectiveness of the instrument can only be measured if it was accurately reported in the financial statements and sustainability reports in accordance with IFRS and the GRI. Furthermore, the instrument should not be seen as an opportunity by motor vehicle manufacturers to forego corporate responsibility to environment and thus should not impact CSI expenditure which is a significant part of the welfare contribution by South African businesses to the people of South Africa.

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I would like to express my deepest appreciation for the understanding, support and help I received from the following persons who contributed towards making the completion of this study possible:

 To the supreme spirit, the almighty God for guidance and wisdom throught the period of study.

 To my parents Selva and Selvy, who were always supportive of my efforts in the academic field.

 To my spiritual master, His Holiness Swami Shankarananda Maharaji who inspired me to take up this challenge and remains an eternal source of energy in my life.

 To my wife, Suganiya, whose patience, love and understanding I shall treasure and value for a life time.

 To my promoter, Prof. P.W. Buys for his support, guidance and patience throughout this process.

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THESIS SUMMARY ... II

ACKNOWLEDGEMENTS ... V

TABLE OF CONTENTS ... VI

TABLE OF CONTENTS ... VI

LIST OF TABLES ... XII

LIST OF FIGURES ... XIII

LIST OF ABBREVIATIONS ... XIV

REMARKS ... XVI

CHAPTER 1 ... 1

1. INTRODUCTION ... 2

1.1. Background ... 2

1.1.1. Carbon taxes and the Triple Bottom Line ... 3

1.1.2. Cap-and-trade schemes ... 4

1.1.3. The South African motor vehicle industry ... 5

1.2. Objective of the research ... 6

1.3. Problem statement ... 8 1.4. Objectives ... 9 1.5. Research method ... 9 1.5.1. Literature study ... 9 1.5.2. Empirical study ... 10 1.6. Definitions ... 11

1.7. Overview ... 13

CHAPTER 2 ... 16

2. RESEARCH DESIGN AND METHODOLOGY ... 17

2.1. Introduction ... 17

2.2. Research philosophy ... 18

2.3. Research design ... 19

2.3.1. Research paradigm ... 19

2.3.2. The Three Worlds Framework ... 20

2.3.3. Paradigm selection for the thesis ... 21

2.4. Research methodology ... 22

2.4.1. Case study research ... 22

2.4.2. Research reasoning ... 23

2.4.3. Research sample selection ... 24

2.4.4. Data collection... 25

2.4.5. Data analysis ... 26

2.5. Limitations and sources of error ... 27

2.6. Summary ... 27

CHAPTER 3 (ARTICLE 1) ... 28

3. CLIMATE CHANGE:A COMPARISON OF MARKET BASED INSTRUMENTS FROM A SOUTH AFRICAN PERSPECTIVE ... 30

3.1. Introduction ... 30

3.1.1. Background ... 30

3.2. The South African context ... 32

3.3. Problem statement and objectives ... 33

3.4. Key features of cap-and-trade and carbon tax schemes ... 33

3.4.1. Introduction ... 33

3.4.2. Cap-and-trade schemes ... 34

3.4.3. Carbon tax ... 35

3.5. Evaluation of the effectiveness of such schemes ... 36

3.5.1. Cap-and-trade schemes ... 36

3.5.2. Carbon tax ... 39

3.5.3. Effects of cap-and-trade and carbon tax on industry ... 40

3.6. An evaluation of National Treasury’s case for carbon tax ... 42

3.7. Conclusion ... 44

3.8. Limitations and future research ... 45

3.9. References ... 46

CHAPTER 4 (ARTICLE 2) ... 52

4. CARBON TAX PRICING AND THE SOCIAL COST OF CARBON:THE CASE IN THE SOUTH AFRICAN MOTOR VEHICLE MANUFACTURING INDUSTRY ... 54

4.1. Introduction ... 54

4.1.1. Background ... 54

4.1.2. Problem statement, objectives and research method ... 56

4.2. Motor vehicle manufacturers and SCC... 57

4.2.1. Section I: Carbon tax compliance ... 58

4.3. The adequacy of carbon tax pricing ... 60

4.3.1. Quantification of the monetary damage of carbon... 61

4.3.2. Quantification models for determining the SCC ... 62

4.3.3. The adequacy of carbon tax pricing in South Africa ... 63

4.4. Discussion and conclusion ... 66

4.4.1. Limitations and future research ... 67

4.5. References ... 68

4.6. Article annexure: Questionnaire ... 71

CHAPTER 5 (ARTICLE 3) ... 73

5. CARBON TAX IMPLICATIONS ON CORPORATE SOCIAL INVESTMENT IN SOUTH AFRICA ... 75

5.1. Introduction ... 75

5.1.1. Background ... 75

5.1.2. The concept of corporate responsibility... 76

5.1.3. The concept of corporate social investment ... 77

5.2. Research objectives and methodology ... 78

5.3. Corporate social investment relevance in South Africa ... 80

5.3.1. Introduction ... 80

5.3.2. CSR and CSI emergence in South Africa ... 80

5.3.3. The South African motor vehicle manufacturer‟s role in CSI ... 82

5.4. The effect of carbon tax on CSI initiatives ... 83

5.4.1. Section 1: CSI perception and carbon tax compliance ... 84

5.4.2. Section 2: Carbon tax pricing ... 85

5.5. Discussion and conclusion ... 87

5.6. Research limitations, contribution and future research ... 88

5.7. References ... 89

5.8. Article annexure: Questionnaire ... 93

CHAPTER 6 (ARTICLE 4) ... 95

6. THE IMPACT OF CARBON TAX ON FINANCIAL AND SUSTAINABILITY REPORTING IN SOUTH AFRICA: THE CASE OF MOTOR VEHICLE MANUFACTURERS ... 97

6.1. Introduction ... 97

6.2. Financial accounting and reporting of carbon tax ... 98

6.3. Problem statement, objectives and research method ... 99

6.4. The growth of sustainable reporting ... 101

6.5. Accounting for carbon tax ... 104

6.6. Empirical results ... 105

6.6.1. IFRS compliance ... 105

6.6.2. Carbon tax compliance and process ... 106

6.6.3. IFRS compliance of carbon tax transactions ... 106

6.6.4. Accounting treatment of carbon tax ... 107

6.7. Discussion and conclusions ... 108

6.8. Limitations and future research ... 109

6.9. References ... 109

6.10. Article annexure: Questionnaire ... 114

CHAPTER 7 ... 117

7.1. Introduction ... 118

7.2. Summary and discussion ... 120

7.2.1. Climate change: A comparison of market based instruments ... 121

7.2.2. Carbon tax pricing and the SCC ... 122

7.2.3. Carbon tax implication on CSI ... 123

7.2.4. Impact of carbon tax on financial and sustainable reporting ... 125

7.3. Contribution and concluding reflection ... 126

7.4. Limitations of the study ... 129

7.5. Future research ... 130

7.6. References ... 131

ANNEXURES ... 140

8. ANNEXURE A:COMPILED RESEARCH QUESTIONNAIRE ... 141

9. ANNEXURE B:ARTICLE 1 AS PUBLISHED ... 147

10. ANNEXURE C:ARTICLE 2 AS PUBLISHED ... 160

11. ANNEXURE D:ARTICLE 3 AS ACCEPTED (PROOF COPY) ... 173

12. ANNEXURE E:CLUTE INSTITUTE‟S AUTHOR GUIDELINES ... 186

13. ANNEXURE F:SUBMISSION NOTIFICATION FOR ARTICLE 4 ... 189

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Table 3.1: Phase I: Emissions of EU ETS countries (tons of carbon) ... 37

Table 3.2: Phase II: Emissions of EU ETS countries (tons of carbon) ... 38

Table 3.3: EU ETS countries: GDP per capita (US dollars at current prices) ... 41

Table 4.1: Descriptive statistics of responses ... 58

Table 4.2: Summary of carbon price estimates ... 63

Table 5.1: Analysis of descriptive statistics ... 84

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Figure 2.1: Three Worlds Framework ... 20

Figure 4.1: Carbon emissions in South Africa ... 64

Figure 5.1: The building blocks of corporate responsibility ... 76

Figure 5.2: Average CSI as reported by the respondents ... 86

Figure 6.1: Sustainability reporting by industry: 2011 ... 102

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Carbon Disclosure Project

Corporate Social Investment

Corporate Social Responsibility

European Union Environmental Trading Scheme

Financial Accounting Standards Board

Generally Accepted Accounting Principles/Practices

Gross Domestic Product

Global Reporting Initiative

International Accounting Standards

International Accounting Standards Board

International Financial Reporting Standards

Institute of Chartered Accountants of England and Wales

International Accounting Standards Committee

Johannesburg Stock Exchange

National Association of Automobile Manufacturers of South Africa

South African Institute of Chartered Accountants

SCC

SRI

TBL

Social Cost of Carbon

Social Responsible Investment

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The reader is reminded of the following:

 This thesis is presented in the article format in accordance with the policies of the North-West University‟s Faculty of Economic and Management Sciences‟ Work Well Research Unit and consists of four research articles.

 In the instance of an article format PhD thesis, the Faculty of Economic and Management Sciences‟ Regulation E.9.3 requires that the thesis consists of at least

three (3) publishable articles, but with the minimum requirement of proof that at least one (1) article has been submitted to a Department of Education approved

peer-reviewed journal.

 Each of the individual articles comply with the writing style requirements (i.e. the specific abstract, spelling, grammar and referencing requirements) of the specific journal in which the applicable article was published, or to which the specific article was submitted.

 The author requirements and related documentation specific to each journal, are included as part of the annexure at the end of the thesis, together with copies of the articles as published or accepted (as the case may be).

1.

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1.1. Background

Climate change has been described as the biggest threat to nature and humanity in the 21st century (WWF, 2013). In South Africa, the level of carbon emissions per unit of economic output was nearly three times the average set by the Organisation for Economic Co-operation and Development (OECD) (Goldblatt & Davies, 2002). One of the methods to address global warming is carbon tax which has been defined as an instrument of environmental cost internalisation, and effectively amounts to an excise tax on the producers of raw fossil fuels based on the relative carbon content of those fuels (OECD, 1997). The objective of carbon tax is thus to control the problem of global warming caused by increasing concentrations of greenhouse gases which include carbon (Pearson & Smith, 1991). On the 1st of September 2010, a national carbon emissions tax on all passenger motor vehicles was implemented in South Africa. According to the National Association of Automobile Manufacturers of South Africa (NAAMSA) the tax added R75 for every gram of carbon dioxide per kilometre it emits over the 120g/km (Shirley, 2010).

Carbon tax has been closely linked to the concept of sustainable development which has been defined as that which implies meeting the needs of the present without compromising the ability of future generations to meet their own needs (UN, 1987). Since the objective of carbon tax is to protect the natural environment by attempting to control the problem of global warming, it may effectively be seen as an instrument to enhance or improve sustainable development.

Within the South African corporate responsibility context, companies have reacted more positively to the concept of investment as opposed to the concept of responsibility. The concept of corporate social investment (CSI) suggests that a business-oriented outcome is often preferred over doing something because it is vaguely ethical (Skinner & Mersham, 2008). The implementation of carbon tax may impact CSI spending by motor vehicle manufacturing companies depending on whether the motor vehicle manufacturing companies perceive carbon tax to adequately address the welfare effects of its implementation through an appropriate carbon tax price.

1.1.1. Carbon taxes and the Triple Bottom Line

Sustainable development may be further broken down into three aspects, the environmental, the social and the economic, which has come to be defined as the triple bottom line (Newport et al., 2003). The triple bottom line has generated a substitute to the idea of company success based on economic indicators alone and it has now been accepted that economic success is not the predominant indicator in evaluating a company‟s long term resolution (Granados & Gamez, 2010). Companies around the world have thus started to view success in terms of sustainable development and linked the concept of progress with the effect of a company‟s operations on quality of life (Hall & Matthews, 2008).

According to Pearce (quoted by Cronje & Chenga, 2009:416) the economic dimension of sustainability is important as critical issues, such as costs associated with environmental pollution, constraints on economic growth and the destruction of non-renewable resources, are addressed by this area of sustainable development. Carbon tax from an economic sustainability point of view may only be feasible as long as the incremental cost of reducing the emission is lower than the increase in the social cost of carbon (SCC) (IPCC, 2012).

With regard to the social dimension of sustainability, Maaga (quoted by Cronje & Chenga, 2009:416) suggests the social dimension of sustainable development encompasses the transformation, and perpetual improvement of the livelihoods of human beings in a specific social context. The responsibility of social sustainability can also be framed in terms of corporate social responsibility (CSR) or corporate citizenship. CSR effectively requires for a company to respond to employees, customers affected communities and the general public, on issues such as human rights and employee welfare (Hamman, 2003).

In terms of the environmental dimension of sustainability, clean air and water, reduced toxic emissions and reducing household waste as well as conserving natural resources are among the important environmental policy objectives that many OECD governments have been pursuing over the past thirty years. In South Africa the level of carbon emissions per unit of economic output was nearly three times the average set by

the OECD (Goldblatt & Davies, 2002). The endeavour to consider the environmental costs of economic growth has been pursued in a variety of ways in different countries, with policy instruments, emission prohibition, tradable permits, and taxes (O‟Brien & Vourc'h, 2001). The environmental sustainability impact of carbon tax can be observed by determining the impact of the tax on motor vehicle manufacturer‟s production technologies and behaviours toward producing more fuel efficient vehicles.

It should be noted that even though carbon taxation was designed to promote environmental sustainable development, its implementation by Government may be inimical to economic and social sustainability. Justification for this statement can be found in the results of simulation models executed by the University of Saskatchewan which revealed that the introduction of carbon taxation had no significant effect on environmental sustainability but decreased economic sustainability (Belcher et al., 2003). As sustainable development is an integrated concept organised in three dimensions namely the economic, social and environmental (EEA GRANTS, 2006), a policy instrument which is effective in one dimension but detrimental to another may be considered an ineffective choice when considering sustainable development as a whole.

Indeed, one of the reasons many developing countries have not implemented carbon tax is because of it regressive economic effect (Timilsina, 2009). The welfare effect of carbon tax (in terms of social sustainable development) has also been examined, and higher carbon taxes have been seen to increase goods prices, reducing the real wage rate and thus the labour supply (Bye & Nyborg, 2003). An isolated simulation study on heat pumps even revealed that the effect of increasing carbon tax was to increase greenhouse gas emissions (Murr et al, 2003).

1.1.2. Cap-and-trade schemes

Another strategy that may be used by governments to lower carbon emissions is cap-and-trade schemes (Anon, 2012). In 1992 the United Nations Framework Convention on Climate Change (UNFCCC) was born with the goal of reducing the concentration of greenhouse gases in the atmosphere. South Africa became a signatory to the UNFCCC in August 1997 (UNFCCC, 2004).

In December 1997 a legally binding agreement known as the Kyoto Protocol was signed by a host of industrial countries (Kyoto, 2010). The protocol contains legally binding greenhouse gas (GHG) emission reduction targets for developed countries, referred to as the so called Annexure I Countries (Persson & Azar, 2003). The protocol also allows for countries who have exceeded their emission limit to remain in compliance by purchasing surplus permits from other industrialised countries (Persson & Azar, 2003). Kyoto protocol mechanisms are emissions trading known as “the carbon market” or “cap-and-trade schemes”, the Clean Development Mechanism (CDM) and Joint Implementation (JI) (UNFCC, 2010). The Kyoto protocol mechanisms thus do not specifically include carbon tax as an instrument to create environmental sustainability.

1.1.3. The South African motor vehicle industry

The South Africa vehicle industry accounts for about 10% of South Africa's manufacturing exports, making it an important part of the South Africa economy (SAI, 2008). In 2008, the vehicle industry contributed approximately 7.5% to South Africa‟s gross domestic product (GDP) with the South African government identifying the industry as a key growth sector (SAI, 2008). In a global context, the South African vehicle industry produced approximately 472,000 vehicles in 2010 compared to global production of 77,609,901 vehicles in the same year (NAAMSA, 2011). In terms of the emissions level of the South African vehicle industry, a sector analysis of greenhouse gas emission in South Africa in 2009 revealed that the transport industry contributed approximately 10.5% to the total greenhouse gas emissions in South Africa (Department of National Treasury, 2010).

In February 2010, NAAMSA accepted that carbon tax will inflate vehicle prices by around 2% and that this would likely lower sales volumes and could negatively impact vehicle industry employment levels (Engineering News, 2010a). Due to the vehicle industry being an important part of the South African economy, it can be inferred that the impact of carbon tax on both the South African vehicle industry and economy would be significant.

1.2. Objective of the research

In the context of global warming, two typical approaches exist in the attempt to reduce greenhouse gas (GHG) emissions (Nordhaus, 2007). The first approach sets quantitative limits or targets for GHG emissions of different countries, with the countries then administering these limits in their own fashion, and a mechanism which will allow for the transfer of emission allowances in terms of the Kyoto Protocol. This is commonly referred to as cap-and-trade schemes. The second approach is to use harmonized prices or taxes as a method of coordinating policies among countries. An example of this approach is carbon taxation.

Although the objective of implementing carbon tax is to reduce greenhouse gases, which is encompassed in the field of environmental sustainability, the impact of this instrument on economic and social sustainable development of the South Africa vehicle industry also needs to be considered. The selection between cap-and-trade schemes and carbon tax thus becomes an important decision from the perspective of environmental sustainability. Furthermore the actual impact of carbon tax on motor vehicle manufacturers‟ decision to produce more fuel efficient vehicles also becomes critical from an environmental sustainability perspective.

The social cost of carbon (SCC) has been defined as the monetary damage done by emitting one more ton of carbon at some point in time. For illustrative purposes, using quantitative modelling a marginal cost of £100 per ton of carbon has been noted in the United Kingdom. The marginal cost of reducing a ton of carbon in terms of the Kyoto protocol has been determined at £45 per ton of carbon. The United Kingdom thus passes the cost versus benefit test in terms of carbon reduction (Pearce, 2003). In terms of economic theory, in conditions of a perfect market where all social costs have been considered, any efforts to cut back the emissions of greenhouse gases would be feasible as long as the incremental cost of reducing the emission is lower than the increase in SCC (IPCC, 2012). Applying this general economic principle to the economic sustainability of carbon tax, it may be argued that the SCC should be equal to, or lower than, revenues generated from carbon taxes in order for the instrument of carbon tax to be feasible.

CSI is a component of CSR and reflects a company‟s contribution to people, organisations or communities that are external to the company (CSI, 2006). An analysis of CSI expenditure by industry in South Africa revealed the manufacturing industry as being the fifth largest contributor to CSI expenditure in South Africa (CSI, 2006). From a social sustainability perspective the impact of carbon tax on CSI expenditure by the motor vehicle manufacturing industry in South Africa still has to be determined. A further contribution of the research is determining the impact of carbon tax on the financial and sustainability reporting to all stakeholders. A key question with regard to financial reporting will be whether the implementation of carbon tax has resulted in a consistent accounting treatment of carbon tax in accordance with IFRS?

For sustainability accounting there is a need for costs and benefits of environmental and social matters to be identified, for measurement and quantification of these where appropriate, for provision of qualitative data when intangible costs and benefits arise, for the use of commonly accepted physical and monetary performance indicators, and for recognition that many impacts of companies take a long time to eventuate (Aras & Crowther, 2009). In South Africa, the critical question is thus whether carbon taxation has been effectively incorporated in the sustainable reporting of motor vehicle manufacturers, ensuring compliance with the Global Reporting Initiative (GRI)?

The contribution to be made by this research study may therefore be summarised as follows:

 An evaluation of whether carbon excise tax is the correct (or best) policy instrument the address South African climate change concerns;

 An evaluation of the appropriateness of the carbon tax price given the SCC in South Africa;

 An evaluation of the impact of carbon tax on CSI activities and expenditure by South African motor vehicle manufacturers; and

 A determination of whether carbon tax has been adequately integrated into sustainable reporting of vehicle manufacturers in South Africa and whether it has been correctly accounted for in terms of IFRS.

1.3. Problem statement

Environmental sustainability has become an increasingly important issue in many countries. In particular, the rise in greenhouse gas emissions has forced many governments to respond by implementing environmental and fiscal instruments which are aimed at reducing the emissions of greenhouse gases. One such instrument is carbon taxation. Sustainable development however, encompasses environmental, social and economic sustainable development. The impact of the implementation of this instrument on economic and social sustainability may very well be adverse, in that case rendering it a poor policy instrument in the broader context of sustainable development. The primary research problem may thus be formulated as follows:

 What is the potential impact of carbon taxation on the triple bottom line of the South African motor vehicle industry?

The primary research problem may then be further examined by considering several detailed questions as follows:

 Is carbon tax the best policy instrument for addressing climate change and ensuring environmental sustainability in South Africa?

 From an economic sustainability perspective, is carbon tax an economically feasible instrument and does the carbon tax price accurately reflect the associated welfare cost of carbon emissions in South Africa?

 Has carbon tax impacted CSI spending and welfare activities by local motor vehicle manufacturers in South Africa from a social sustainability perspective?

 What has been the impact of the implementation of carbon taxation on sustainable and financial reporting compliance for motor vehicle manufacturers in South Africa?

These questions are considered in more detail in the various articles forming the primary chapters of the thesis.

1.4. Objectives

The primary objective of this study is to evaluate the potential impact of carbon tax (in the form of passenger motor vehicle carbon tax) on the triple bottom line of the South African motor vehicle industry.

This objective will be reached by:

 Analysis of the advantages and disadvantages of carbon tax and cap-and-trade schemes in the context of the triple bottom line.

 Brief consideration of the rationale behind the implementation of carbon tax on the vehicle industry in South Africa.

 An evaluation of the adequacy of carbon tax pricing in South Africa considering the SCC in South Africa.

 An evaluation of the impact of carbon tax taxation on the financial and sustainable reporting of motor vehicle manufacturers in South Africa.

 An evaluation of the impact of carbon tax on CSI spending by the South Africa motor vehicle manufacturers.

1.5. Research method

To achieve the above objectives, a theoretical study of recent literature as well as an empirical study is required.

1.5.1. Literature study

In line with the article format of this thesis, a theoretical study is to be conducted with four focus areas, integrated into the various articles.

 A first focus area will be on the distinguishing features of cap-and-trade schemes and carbon tax as well as the advantages and disadvantages of each instrument. The analysis of each instrument will also include an evaluation of the instruments from a triple bottom line perspective. This will include a review of scientific articles on the subject of carbon tax and cap-and-trade schemes. In addition an evaluation of the reasons provided by National Treasury for the implementation

of carbon tax as opposed to cap-and-trade schemes in South Africa will be considered.

 A second focus of the study will be on quantifying the SCC (quantified damage cost) of carbon emissions by passenger motor vehicles in South Africa. The carbon tax price will then be compared to the relative damage cost of carbon to determine its adequacy and overall impact on social sustainability. The literature review will involve the obtaining the details of emission levels of motor vehicles in South Africa after the implementation of carbon tax and comparing the damage cost of such emissions against the revenue collected from the implementation of the tax.

 A third focus of the study will focus on the impact of carbon tax on the CSI expenditures by the motor vehicle manufacturers in South Africa. CSI reports published by motor vehicle manufacturers detailing the level of CSI expenditure and activities by motor vehicle manufacturers in South Africa will be reviewed. The relevance and materiality of CSI expenditure on the South African economy will also be highlighted per a detailed review of applicable motor vehicle industry reports.

 The fourth area will focus on the compliance levels of motor vehicle manufacturers with sustainability reporting standards. In this regard the latest sustainable reports from major vehicle manufacturers will be examined as well as the published statistics and reports from the GRI. Overall levels of compliance by motor vehicle manufacturing companies with the GRI will be determined by noting the number of integrated reports submitted by motor vehicle manufacturers as well the levels of disclosures on such report.

1.5.2. Empirical study

In support of, and building on, the literary research as specified above, the empirical phase will focus on the South African motor vehicle manufacturing industry. The empirical study will use the questionnaires and interviews developed following the literature study. The empirical study will focus on three primary areas.

 The first focus area will determine the economic feasibility of carbon tax by considering the SCC. The empirical research in this regard will attempt to

determine awareness of the SCC concept among motor vehicle manufacturers and their view of the adequacy of the carbon tax price.

 A second focus area will be to determine the impact of carbon tax on CSI policy and expenditure by motor vehicle manufacturers in South Africa. The levels of CSI expenditure both before and after implementation of carbon tax will be examined, and respondents will be asked to confirm whether the implementation of carbon tax has affected CSI decision making processes.

 A third focus area of empirical research will be on the level of IFRS compliance by motor vehicle manufacturers with regard to carbon tax disclosures. The respondents will be asked to confirm that all IFRS disclosures relating to carbon tax been made and the skill level of personnel dealing with IFRS transactions. In addition, the respondents will be asked to provide feedback in the form of journal entries to confirm the correct accounting treatment of carbon tax in accordance with IFRS.

1.6. Definitions

In the context of this study, the following definitions and concepts are taken as correct or applicable.

Cap-and-trade schemes: Such schemes are Kyoto protocol mechanisms (UNFCC,

2010) which sets quantitative limits or targets for GHG emissions of different countries with countries then administering these limits in their own fashion, and a mechanism which will allow for the transfer of emissions allowances in terms of the Kyoto Protocol. This is commonly referred to as cap-and-trade schemes (Nordhaus, 2007). Cap-and-trade schemes thus set quantitative limits on carbon emissions by the distribution and administration of permits which can be traded by emitters.

Carbon tax: An instrument of environmental cost internalisation, which and effectively

amounts to an excise tax on the producers of raw fossil fuels based on the relative carbon content of those fuels (OECD, 1997). Carbon tax has also been defined as a strategy to lower carbon emissions by effectively raising the price of fossil fuels based on their carbon content (Anon, 2012). Carbon tax is thus a climate change instrument

which raises the price of fuel inefficient products thus attempting to influence consumer behaviour toward fuel efficient choices.

Corporate Social Investment (CSI): A component of CSR and reflects a company‟s

contribution to people, organisations or communities that are external to the company (CSI, 2006). CSI aims to uplift communities in such a way that the overall quality of life is improved (CSI, 2012). CSI can thus be regarded as a subcomponent of CSR which is focused on uplifting communities which are external to a company.

Corporate Social Responsibility (CSR): A concept whereby companies integrate

social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis (Commission of European Communities, 2009). CSR refers to the organisation‟s total responsibility towards the business environment (CSI, 2012). In a broader context, CSR therefore refers to the obligation of a company to recognise its impact on an environmental and social level and engage in activities that will bring a positive impact to these spheres which could be communicated to stakeholders on a consistent and regular basis.

Global Reporting Initiative (GRI): The GRI is an organization that promotes

sustainable development in the field of sustainability reporting is the (GRI, 2012). The GRI aims to develop a voluntary reporting framework that will elevate sustainability reporting practices to a level equivalent to that of financial reporting in rigour, comparability, auditability and general acceptance (Willis, 2003). The GRI is thus an organisation that produces the standard in terms of the minimum disclosure requirements that a sustainable report should contain.

Kyoto Protocol: A legally binding agreement stipulating greenhouse gas reduction

targets signed by a host of industrial countries including developed countries referred to as Annexure 1 Countries (Kyoto, 2010; Persson & Azar, 2003). The protocol thus represents a legal obligation to its signatories to adhere to their environmental obligations of reducing greenhouse gas emissions.

Social Cost of Carbon (SCC): The SCC has been defined as the amount of damage

2009; Pearce, 2003). The SCC thus represents the total quantified welfare cost of emitting an additional ton of greenhouse gas into the atmosphere.

Sustainable development: That which implies meeting the needs of the present which

include the protection of the natural environment without compromising the ability of future generation to meet their own needs (UN, 1987; Mohammed, 2011). It is a concept that directs the efficient use of resources in such a way that the needs of both the present and future generations are met.

Sustainability: Refer sustainable development

Sustainable reporting: In broad terms it is generally used to describe a company‟s

reporting on its economic, environmental and social performances which would be disclosed in a sustainability report (KPMG, 2008; GR, 2013). Sustainable reporting thus encapsulates the reporting of environmental as well as social costs and benefits to provide an accurate view of a company‟s levels of sustainability.

Triple-bottom-line (TBL): A substitute idea of company success not based on

economic indicators alone but based on the three aspects of sustainable development, the environmental, the social and the economic (Granados & Gamez, 2010; Newport et al., 2003). The TBL is therefore a concept that has influenced companies to view their success not only in terms of profitability and economic growth but also the level of company impact on environment and people.

1.7. Overview

The study will follow the article format route and is divided into seven chapters (including four research articles) as follows:

Chapter 1 - Introduction

This chapter will address the following background to the study, the rationale of the study, the problem statement, research objectives, research methodology used in the study and the outline of the study.

The second chapter will elaborate on the research methodology and research design followed by providing details regarding case study research, the sampling technique utilised and data collection techniques.

Chapter 3 - Climate change: A comparison of market-based instruments from a South

African perspective

The third chapter (research article 1) will focus on the distinguishing characteristics of carbon tax cap-and-trade schemes. A detailed review of published scientific economic journals and statistics will be conducted to determine the advantages and disadvantages of each instrument from a TBL perspective. In particular an assessment of the reasons provided for the implementation of carbon tax as oppose to cap-and-trade in South Africa by National Treasury will also be evaluated.

Chapter 4 - Carbon tax pricing and the social cost of carbon: The case in the South

African motor vehicle manufacturing industry

A fourth chapter (research article 2) will focus on economic feasibility of a carbon tax in South Africa. This will be done by comparing the SCC against the actual carbon tax price to determine the accuracy of the carbon tax price. The adequacy and reasonability of carbon tax pricing in South Africa will be assessed via a literature study and empirically via interviews and a questionnaire with the motor vehicle manufacturers on their perceptions of the reasonability of the carbon tax price.

Chapter 5 - Carbon tax implications on corporate social investment in the South

African motor vehicle manufacturing industry

The fifth chapter (research article 3) will focus on the impact of the implementation of carbon tax on CSI expenditure and activities by motor vehicle manufacturers in South Africa. Details of CSI expenditures and projects undertaken by motor vehicle manufacturers will be considered and CSI expenditure both before and after carbon tax implementation will be compared in order to gauge the potential impact of carbon tax on CSI policy and expenditure.

The sixth chapter (research article 4) will focus on the impact of carbon tax on financial and sustainable reporting. Compliance with the GRI will be reviewed from a literature study perspective. Empirical research will be conducted on the adequacy of carbon disclosures on the financial statements as well as the level of IFRS compliance in respect of carbon tax transactions.

Chapter 7 - Conclusion and recommendations

This final chapter in the thesis will provide a summary of the study in the light of the objectives as set out. Conclusions, recommendations and areas for further studies will also briefly be discussed in this final chapter.

2.

R

2.1. Introduction

The objective of this chapter is to explain and provide supporting reasoning for the research philosophy, design and methodology employed in this research project, aimed at answering the research problems as expressed in chapter 1. The research was conducted primarily as a case study, with further supporting detail being provided later in the chapter. This chapter will also include detail on the population and the sample selection, as well as the data collection and analysis used in the study. Important terminologies and definitions are noted below:

 Research philosophy: According to Alolo (2007:3) a research philosophy is a belief about the way in which data about a phenomenon should be collected, analysed and interpreted. Two major research philosophies include i) epistemology, which enquires about the nature of knowledge and learning, and ii) ontology, which is the science or study of being (Bauer, Festner, Gruber, Harteis & Heid, 2004; Blaikie quoted by Flowers, 2009:1). In the context of this research project, the term research philosophy is taken as the overall view on the nature of the subject matter being investigated, in other words whether we are investigating the subject of existence or a theory of knowledge.

 Research design: Research design has been defined as the strategy, the plan and the structure of conducting a research project (Carriger, 2000). Research design has also been described as a function to ensure that the evidence obtained enables the researcher to answer the research problem as unambiguously as possible (NYU, 2013). The concept of research design in this study is therefore the overall plan used by the researcher to address the research problem identified in each of the research chapters.

 Research methodology: Rajasekar, Philminathan & Chinnathambi (2006:2) defines research methodology as the procedures by which researchers go about their work of describing and predicting phenomena, or a study of the methods by which knowledge is gained. The primary distinguishing factor between research design and research methodology is that whereas research design is focused on

the end product and what the outcome of the study will be, the research methodology is focused on the research tool, tasks and procedures to be employed in the study (Mouton, 2009:56). In terms of this study, research methodology means determining the actual nature and extent of procedures to be applied in order to obtain a research solution.

2.2. Research philosophy

In addressing the research problem, an effective research philosophy and approach is required. As mentioned, the two primary philosophy systems are ontological and epistemological philosophy. Firstly, according to Blaikie (quoted by Flowers 2009:1) ontological philosophy may be defined as the science or study of being and develops this description for the social sciences to encompass „claims about what exists, what it looks like, what units make it up and how these units interact with each other‟. Ontology may be further broken down into i) objectivism whose proponents believe there is one true and correct reality which we can come to know following the objective methods of science (Vrasidas, 2000) and ii) constructivism which is based on the idea that knowledge is constructed by the knower based on mental activity (USASK, 2013). Secondly, epistemological philosophy emphasizes beliefs which are fundamental assumptions about the nature of knowledge and learning (Bauer et al., 2004). According to Alolo (2007) epistemological philosophy encompasses various philosophies of research including positivism and interpretivism. It is thus evident that while epistemological research is in respect of enquiries into subject matter or knowledge that is in existence, and attempts to explore certain beliefs and/or assumptions about such knowledge, ontological research is attempting to establish knowledge of the existence of an object, principle, behaviour, characteristic or relationship that may not be known. The enquiries into both types of research are thus distinct since the ontological is in essence enquiring as to whether an object or principle exists whereas epistemological is in essence enquiring as to the accuracy of our beliefs and assumptions about a known object or principle.

In terms of specific research philosophies, positivism seeks to explain and predict what happens in the social world by searching for regularities and causal relationships between its constituent elements and is based on traditional approaches which dominate

the natural sciences (Burell & Morgan, 1979). Alolo (2007) states that interpretivism on the other hand, holds that social science is fundamentally different to natural sciences and therefore approaches to the study of social phenomenon may typically not be the same as the natural sciences, with proponents of interpretivism arguing that attempts to understand social reality must be founded on people‟s experience of social reality.

Due to the fact that the study considers the potential impact of carbon tax on the South African motor vehicle manufacturing industry, based on certain beliefs of acceptable norms and values for the vehicle industry, the primary research philosophy system adopted could be considered as epistemological in nature. Within the epistemological assumption both the positivist and interpretivist positions are adopted as the research uses both the traditional approach which dominate natural sciences such as (basic) statistical analysis as well methods which are founded on peoples experience of social reality, such as is included in the form of structured questionnaires.

2.3. Research design

Research design typically follows a characteristic cycle whereby initially an exploratory stance is adopted, where an understanding of a problem is developed and plans are made for some form of intervention strategy (USC, 2013). The research design of a project not only places value on areas of research, but equally on theoretical frameworks that are applicable to the project. In terms of the framework for research design, it has been suggested by Creswell (2003:3) that a general research framework should provide guidance about all facets of the study, from assessing the general philosophical ideas behind the inquiry to the detailed data collection and analysis procedures to be adopted. There are various theoretical frameworks that may be applied to a research project including the Three Worlds Framework, developed by Mouton (1996) which highlights the methodological differences between research approaches in the social sciences. These research approaches can be categorised as i) lay or ordinary knowledge; ii) scientific research and iii) reflections of research design and methodology. The aforementioned are all respectively categorised into different “world-paradigms” to highlight the distinguishing nature of each research approach.

2.3.2. The Three Worlds Framework

An important research framework in clarifying the object of the research is found in the Three Worlds Framework developed by Mouton and illustrated in Figure 2.1 below. The framework is based on a distinction between three levels or paradigms.

Figure 2.1: Three Worlds Framework

Source: (Adapted from Mouton, 2009:136)

Within the above framework, World 1 is seen as the world of everyday life and ordinary or practical knowledge. This can include practical accounting problems such as incorrectly applying the accounting standards to carbon tax transactions. It can also include not properly applying carbon tax legislation in determining the amount of carbon tax to be paid to tax authorities. Whereas World 1 is about everyday life, World

World 3 Meta Science

Philosophy of Science / Research Ethics and Methodology – Recommendations on carbon tax pricing and policy

World 2 Science

Scientific knowledge and research – Carbon tax policy, pricing and accounting standards

World 1 Everyday life

Physical reality and lay knowledge – Payment of carbon excise tax on the purchase of motor vehicles

2 is concerned with more scientific research, and in particular making the lay knowledge in World 1 a subject of enquiry. World 2 will provide a body of existing knowledge in areas such as carbon tax policy and pricing. In the context of this study, World 2 activities could include determining whether the current carbon tax price is correct and whether it is in fact the best policy for South Africa. The scientific research in World 2 will be obtained in this study through review of academic articles, carbon tax legislation and policy as well as using questionnaires and interviews. Finally, World 3 refers to the reflection of the scientific research, research design and methodology and research ethics which are ordinarily applied in World 2. In the context of this study World 3 activities may include recommendations regarding carbon tax policy, pricing and accounting treatment based on scientific research obtained in the World 2 context.

2.3.3. Paradigm selection for the thesis

Considering the above, this thesis‟ research approach incorporates all three World Levels to some extent. The questionnaires used in the empirical study, are used primarily in the context of the 1st World paradigm in that the actual experiences and perceptions of the respondents are gauged. Since this study deals with carbon tax pricing, carbon tax policy and the proper accounting of carbon tax, it will entail investigations and enquiries into carbon tax policy, pricing and accounting standards resulting in greater scientific knowledge in these areas. The study therefore also falls within the theoretical 2nd World level of sustainability and social responsibility, and how the implementation of carbon taxes might impact on the 1st World paradigm. Finally in making the interpretations and recommendations based on the study, the 3rd World paradigm is also touched upon.

In addition, when considering the Three Worlds Framework, the research approach utilised in this study may fall into the following theoretical frameworks:

 Positivist framework: A philosophical approach which assumes that reality is objectively given and can be described by measurable properties which are independent of the observer (researcher) and his or her instruments (Myers, 1997). The positivist school of thought maintains that only by applying the methods of natural science to social science (including organizational research)

will it ever be able to match the achievements of natural science in explanation, prediction, and control (Lee, 1991).

 Interpretivist framework: In this approach researchers start out with the assumption that access to reality (given or socially constructed) is only through social constructions such as language, consciousness and shared meanings (Myers, 1997). Interpretative methods of research adopt the position that our knowledge of reality is a social construction by human actors (Walsham, 1995).

 Critical framework: This is a philosophical research approach that represents multiple types of research and has its source in the word “critical”, which is used to identify approaches that challenge norms and aim to expose structures of power and domination (US, 2013). Critical social research attempts to reveal the socio-historical specificity of knowledge and to shed light on how specific knowledge reproduces structural relations of inequality and oppression (Muncie, 2013).

In terms of the theoretical framework therefore, the study will primarily fall into both the positivist and interpretivist frameworks as both quantitative methods in the form of numerical analysis and qualitative methods in the form of interviews which construct a social reality are used in the study. In addition, the research challenges the tax policy decisions taken by National Treasury which have been taken for granted as the norm thus qualifying it to fall within the purview of the critical framework.

2.4. Research methodology

As mentioned earlier, this study follows a case study approach into the potential impact of carbon taxes on the South African motor vehicle manufacturing industry, and related corporate responsibility issues. A case study is a research strategy which focuses on the dynamics present within a single setting and typically combines data collection methods such as interviews, questionnaires and observation in producing quantitative or qualitative data (Eisenhardt, 1989). A case study has also been defined as a trans-paradigmatic and trans-disciplinary heuristic that involves the careful delineation of the phenomena for which evidence is being collected (Van Wynsberghe & Khan, 2007).

Case study research has both benefits and limitations with qualitative methodologists having identified case study methods as having comparative advantages in developing internally valid and context-sensitive measures of concepts (Bennett & Elman, 2006). In terms of limitations of case studies, the researcher may not be able to identify all reasonable rival hypotheses or give appropriate consideration to the role of external factors such as political factors in the situation of interest (Barkely, 2006).

Within a case study research approach there also exists distinguishing types of research. Quantitative research generally focuses on measuring social reality with quantitative questions directed to establish numerical conclusions (Holden & Lynch, 2013; Sukamolson, 2007). Quantitative researchers view the world as reality that can be objectively determined thus necessitating firm guidelines in the process of data collection and analysis (Holden & Lynch, 201; Sukamolson, 2007). On the other hand, qualitative research methods were developed in the social sciences to enable researchers to study social and cultural phenomena with examples hereof being action research, case study research and ethnography (Myers, 1997). Data sources for qualitative research will thus include observation, documents, texts, questionnaires as well the researchers‟ impressions (Myers, 1997). The research conducted in this study therefore used both quantitative and qualitative techniques.

2.4.2. Research reasoning

In terms of reasoning, there are typically two types of reasoning approaches used in scientific research, namely deductive and inductive reasoning. Firstly, the deductive reasoning involves the claim that the premise provides absolute grounds for accepting the conclusion or moving from the more general to the specific (Goel, Gold, Kapur & Houle., 1997; Burney, 2008). Secondly, the inductive reasoning involves the claim that premise provides only limited grounds for accepting the conclusion or moving from specific observations to broad generalisations (Goel et al., 1997; Burney, 2008). In the context of this research project, a primarily inductive reasoning approach is followed in that the specific responses from respondents are used to interpret the situation for the broader case of the motor vehicle manufacturing industry.

2.4.3. Research sample selection

A target population may be defined as a group or individuals to which a specific questionnaire or survey is applicable (Kitchenam, 2002), in other words those groups or individuals who are in a position to respond and to whom the results of the survey apply to. The target population in this study has the following characteristics:

 Multinational motor vehicle manufacturers;

 within the boundaries of the Republic of South Africa; and

 subject to carbon excise tax on motor vehicles sold to the general public.

In consideration of the above criteria, the total number of motor vehicle manufacturers in South Africa is according to the National Association of Automobile Manufacturers of South Africa (NAAMSA, 2013) the following manufacturers:

 Volkswagen South Africa (Pty) Ltd;

 BMW SA (Pty) Ltd;

 Daimler Chrysler SA (Pty) Ltd;

 Toyota SA (Pty) Ltd;

 Nissan SA (Pty) Ltd;

 Renault SA (Pty) Ltd;

 GM SA (Pty) Ltd; and

 Ford SA (Pty) Ltd.

Since Nissan and Renault have entered in a global alliance via crossholdings in each other, for the purposes of this study they have been considered as one multinational motor vehicle manufacturer (Renault, 2013). Also note that all these companies are privately owned by their global holding companies. These companies therefore made up the target population for this study from which the sample was identified. Sampling may be defined as the selection of some part of an aggregate or totality on the basis of which a judgement or inference about the aggregate or totality is made, or the process of obtaining information about an entire population by examining only a part of it (Haque & Bharati, 2013). According to Marshall (1996:523) there are three key sampling strategies, based on the accessibility of the subjects that a researcher may

adopt. These include judgement sampling, theoretical sampling and convenience sampling. Furthermore non-probability sampling refers to those sampling methods that are not based on mechanical procedures involving, for example, lists of random numbers, but is rather based on some element of judgement or purposeful selection (Doherty, 1994).

In terms of this case study therefore, all companies who were listed as vehicle manufacturers in South Africa were approached for participation in the study. The intended sample thus represented the entire population of motor vehicle manufacturers in South Africa. In terms of responses received, three of the motor vehicle manufacturers declined their participation; this was due primarily to the sensitivity of information being released and the fact that they were privately-held companies. Four motor vehicle manufacturers initially agreed to respond to the questionnaire and one motor vehicle manufacturer did not indicate whether they were able to respond to the questionnaire. Unfortunately one of initially participating respondents withdrew their participation during the empirical phase. Excluding the non-responsive participant the study field therefore consisted of three respondents who were initially willing to participate in selected using convenience sampling. The final study field thus represent approximately 43% of the total population of motor vehicle manufacturers in South Africa. Since convenience sampling is based on the accessibility of subjects (Marshall, 1996) which would involve a purposeful selection it would fall into the realm of non-probability sampling. According to Middleburg (2011:135) non-non-probability sampling is appropriate for both quantitative and qualitative studies.

The motor vehicle industry is highly competitive and it is perceived that the information required for this study can be sensitive in nature and compromise an entity‟s competitive advantage. The final respondents in the study are thus not named in the study, with all information in the study being treated as strictly confidential.

2.4.4. Data collection

As stated above, the research methodology may be qualitative in nature in the form of case studies or focus groups or quantitative in nature such as mail or telephone survey or a combination of both qualitative and quantitative. Empirical data in this study was

obtained through structured questionnaires as well as follow up telephonic discussions and email correspondence explaining the questions to respondents. An exploratory survey questionnaire was prepared based on the underlying literature reviews and the knowledge obtained during such literature study. The total overarching questionnaire consisted of thirty six questions utilising an appropriate Likert-type response scales and served as a basis for comparison between the respondents (refer to Annexure A:

Compiled research questionnaire on page 141 for the detailed questionnaire).

The researcher was available during the survey in order to provide guidance and clarification should the respondents have required clarification with regards to the questionnaire. The respondents were first contacted telephonically to explain the purpose of the questionnaire and determine if they were willing to consider the questionnaire for participation in the study. Questionnaires were then emailed to the respondents specifying an appropriate time period for responses. Follow up telephonic discussions were initiated by the researcher to track the progress of responses with respondents.

2.4.5. Data analysis

A preliminary review of data was conducted while the process of data collection was in process. Once the data collection was complete, an analysis of data was conducted which involved developing summaries, applying statistical techniques and investigating any relationships. Data obtained during the study included both qualitative and quantitative information. A graphical analysis of all the responses to the questions was first summarised and then a descriptive statistic summary of all questions is completed confirming statistical information such as minimum, maximum and mean results per question where a Likert type response scale was used. Response to Likert response scale questions were evaluated using the mean statistic for the question as well as considering the overall percentage response to questions.

In certain instances the accounting treatment of specific transactions was obtained and compared to the relevant accounting standard to determine the level of accounting compliance. The respondents‟ perception on issues such as carbon tax pricing and policy was also collated and considered in conjunction with numerical data to formulate